Question 1

Some economists develop theories concerning policy issues to

Accepted Answer

A) further their own political agendas. 
B) understand what happened in an earlier time period. 
C) describe current economic events. 
D) make sound recommendations about policy alternatives. 
E) help elect new government officials. 
A) further their own political agendas. 
B) understand what happened in an earlier time period. 
C) describe current economic events. 
D) make sound recommendations about policy alternatives. 
E) help elect new government officials.

Question 2

Greater economic efficiency and income equality can usually both be achieved in an economy simultaneously.

Accepted Answer

A) True 
 B)False

Question 3

There are never any adverse consequences of government attempts to modify the laws of supply and demand.

Accepted Answer

A) True 
 B)False

Question 4

Graphs are useful because of the way they

Accepted Answer

A) facilitate interpretation and analysis of data. 
B) clarify interpretation and analysis of ideas. 
C) permit a person to easily see relationships. 
D) convey an idea that might otherwise take many words. 
E) All of these responses are correct. 
A) facilitate interpretation and analysis of data. 
B) clarify interpretation and analysis of ideas. 
C) permit a person to easily see relationships. 
D) convey an idea that might otherwise take many words. 
E) All of these responses are correct.

Question 5

Abstraction ignores many details in order to focus on the most important elements of a problem.

Accepted Answer

A) True 
 B)False

Question 6

A student eats a candy bar just prior to taking a test and receives a high grade.He does not buy one for the next test and receives a low score.On his third test, he again eats a candy bar and gets a high score.This student concludes that eating candy bars leads to higher test scores.His hypothesis

Accepted Answer

A) should be termed a "theory." 
B) assumes that correlation implies causation. 
C) assumes that causation implies correlation. 
D) reflects the amount of studying he had done for the exams. 
A) should be termed a "theory." 
B) assumes that correlation implies causation. 
C) assumes that causation implies correlation. 
D) reflects the amount of studying he had done for the exams.

Question 7

In the winter quarter at Frozen U.one year, snow falls every Friday night.Students conclude that, on their campus, Fridays cause snow.This hypothesis

Accepted Answer

A) should more properly be considered a theory. 
B) assumes that correlation implies causation. 
C) assumes that causation implies correlation. 
D) reflects the fallacy of composition. 
A) should more properly be considered a theory. 
B) assumes that correlation implies causation. 
C) assumes that causation implies correlation. 
D) reflects the fallacy of composition.

Question 8

Economic problems are made manageable by stripping away some of the unnecessary details.

Accepted Answer

A) True 
 B)False

Question 9

A useful economic model

Accepted Answer

A) deals only with possibilities that actually occurred. 
B) makes only realistic assumptions. 
C) may make some unrealistic assumptions in order to simplify a complex reality. 
D) will avoid conclusions that have public policy implications, because economists do not make value judgments. 
A) deals only with possibilities that actually occurred. 
B) makes only realistic assumptions. 
C) may make some unrealistic assumptions in order to simplify a complex reality. 
D) will avoid conclusions that have public policy implications, because economists do not make value judgments.

Question 10

If a decision maker uses marginal analysis, then the relevant costs are the

Accepted Answer

A) full costs of a particular activity or product. 
B) fixed costs that do not vary with the extra activity or output. 
C) profits obtained on the activity or product. 
D) average costs for a particular activity or product. 
E) additional costs of a particular activity or product. 
A) full costs of a particular activity or product. 
B) fixed costs that do not vary with the extra activity or output. 
C) profits obtained on the activity or product. 
D) average costs for a particular activity or product. 
E) additional costs of a particular activity or product.

Question 11

A ray through the origin always has a slope of one.

Accepted Answer

A) True 
 B)False

Question 12

A contour map illustrates a cause-and-effect relationship among three variables.

Accepted Answer

A) True 
 B)False

Question 13

The slope of a curved line at a particular point is

Accepted Answer

A) always greater than the slope of a straight line at the same point. 
B) always smaller than the slope of a straight line at the same point. 
C) defined as the slope of the straight line representing the average values for the entire curve. 
D) defined as the slope of the straight line that is tangent to the curve at that point. 
A) always greater than the slope of a straight line at the same point. 
B) always smaller than the slope of a straight line at the same point. 
C) defined as the slope of the straight line representing the average values for the entire curve. 
D) defined as the slope of the straight line that is tangent to the curve at that point.

Question 14

When variable A rises by 10 units, variable B rises by 15 units.The slope of the line describing this relationship is

Accepted Answer

A) always 2/3. 
B) either 2/3 or 1.5, depending on which variable goes on which axis of the graph. 
C) either 1.5 or −1.5, depending on which variable goes on which axis. 
D) always −1.5. 
A) always 2/3. 
B) either 2/3 or 1.5, depending on which variable goes on which axis of the graph. 
C) either 1.5 or −1.5, depending on which variable goes on which axis. 
D) always −1.5.

Question 15

Many believe that fairness calls for higher income taxes on the wealthy.Using one of the "Ideas for Beyond the Final Exam," explain how higher taxes on the wealthy will affect output.

Accepted Answer

Greater equality comes at the expense of

Question 16

A small increase in productivity growth can have a huge impact on a country's standard of living.

Accepted Answer

A) True 
 B)False

Question 17

The high unemployment of 2008-2010 caused a substantial decrease in inflation, which created fears of deflation.

Accepted Answer

A) True 
 B)False

Question 18

A theory can best be defined as

Accepted Answer

A) an untested assertion of untested fact. 
B) a set of assumptions that simplify the real world. 
C) the opinion of a reliable person who studies a subject or discipline. 
D) a deliberate simplification of factual relationships that attempts to explain how those relationships work. 
E) the accumulation of knowledge that has been verified by the scientific community. 
A) an untested assertion of untested fact. 
B) a set of assumptions that simplify the real world. 
C) the opinion of a reliable person who studies a subject or discipline. 
D) a deliberate simplification of factual relationships that attempts to explain how those relationships work. 
E) the accumulation of knowledge that has been verified by the scientific community.

Question 19

A line that slopes downward from left to right has a positive slope.

Accepted Answer

A) True 
 B)False

Question 20

Which person has the highest opportunity cost of obtaining a college degree (assuming that attending college requires giving up his or her current position)?

Accepted Answer

A) Bill, who is unemployed. 
B) Jane, who is an unwed mother and earns $15,000 a year. 
C) Larry, who is a technician in the navy earning $18,000 a year with free food and housing. 
D) Mary, who has a job earning $60,000 a year as a computer programmer. 
E) Unable to determine from the data given. 
A) Bill, who is unemployed. 
B) Jane, who is an unwed mother and earns $15,000 a year. 
C) Larry, who is a technician in the navy earning $18,000 a year with free food and housing. 
D) Mary, who has a job earning $60,000 a year as a computer programmer. 
E) Unable to determine from the data given.

Exam 1: What Is Economics

Some economists develop theories concerning policy issues to

Greater economic efficiency and income equality can usually both be achieved in an economy simultaneously.

There are never any adverse consequences of government attempts to modify the laws of supply and demand.

Graphs are useful because of the way they

Abstraction ignores many details in order to focus on the most important elements of a problem.

A student eats a candy bar just prior to taking a test and receives a high grade.He does not buy one for the next test and receives a low score.On his third test, he again eats a candy bar and gets a high score.This student concludes that eating candy bars leads to higher test scores.His hypothesis

In the winter quarter at Frozen U.one year, snow falls every Friday night.Students conclude that, on their campus, Fridays cause snow.This hypothesis

Economic problems are made manageable by stripping away some of the unnecessary details.

A useful economic model

If a decision maker uses marginal analysis, then the relevant costs are the

A ray through the origin always has a slope of one.

A contour map illustrates a cause-and-effect relationship among three variables.

The slope of a curved line at a particular point is

When variable A rises by 10 units, variable B rises by 15 units.The slope of the line describing this relationship is

Many believe that fairness calls for higher income taxes on the wealthy.Using one of the "Ideas for Beyond the Final Exam," explain how higher taxes on the wealthy will affect output.

A small increase in productivity growth can have a huge impact on a country's standard of living.

The high unemployment of 2008-2010 caused a substantial decrease in inflation, which created fears of deflation.

A theory can best be defined as

A line that slopes downward from left to right has a positive slope.

Which person has the highest opportunity cost of obtaining a college degree (assuming that attending college requires giving up his or her current position)?

The Economony: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Useconomy

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